Flash off the rumor mill, unconfirmed — it appears the Greek banks were just cut off by the ECB.
If this is true then this is the latest “Gun up the nose” game by the Germans and ECB, and is almost-certain, in this political climate, to blow up their face (and quite possibly with shooting involved on the part of the Greeks too.)
This instantly hit the Euro and US stock market, which had been having a reasonably decent day.
If true and confirmed then Greece has been effectively orphaned. This appears to be a facial attempt to stick a tourniquet on Greece’s neck, as with elections due next month cutting off Greek banks now will basically guarantee they all detonate.
Expect the incipient bank runs to resume en-masse within hours if not minutes.
Time to critical mass is now measured in days if not hours, and if acceleration occurs the weekend is the perfect time for Greek authorities to drop the hammer in the form of a bank holiday and capital controls as they will have no choice irrespective of the critical damage that will result from them doing so.
More as I’m able to learn and/or confirm it.
Update: Just repeated on CNBC – ECB stopping monetary policy operations with “some” Greek banks. Hmmm…. what’s “some” gents?
More updates: Flying tweets from all sides on this and on a rumored withdraw limit. Who knows what the truth is — or if this was a trial balloon. Note that the time to drop a hammer like this that is “least disruptive” is when banks are CLOSED — like, for example, the weekend.
Reuters reports as follows;
(Reuters) – The European Central Bank has stopped monetary policy operations with some Greek banks as they have not been successfully recapitalized, euro zone central bank sources said on Wednesday.
The ECB declined to comment.
The ECB only conducts its refinancing operations with solvent banks. With no access to ECB funds, the banks concerned must go to the Bank of Greece for emergency liquidity assistance (ELA).
It was unclear exactly how many banks were affected.
One person familiar with the matter said four Greek banks’ capital was so depleted they were operating with negative equity capital. According to its own rules, the ECB cannot provide liquidity to banks in such a situation.
The ECB said earlier on Wednesday it continued to support Greek banks.